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TMI Blog1985 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... t day of the accounting year for the assessment year 1968-69 ? " Writ Petition No. 2731 of 1979: In this petition under art. 226 of the Constitution, the assessee has challenged r. 115(b) of the I.T. Rules of 1962 ("the Rules "), as ultra vires of the Act. But, in order to appreciate the question referred to us and raised in the writ petition, it is first necessary to notice the facts that are not in dispute. During the previous year ended March 31, 1968, corresponding to the assessment year 1968-69, the assessee, a British subject but a resident Indian, sold on different dates in the United Kingdom (U.K.), many of them prior to November 19, 1967, and the remaining thereafter but all of them prior to March 31, 1968, certain shares and securities held by him. During the same period, the assessee also received dividends from U.K. prior to November 19, 1969, and thereafter also but all of them prior to March 31, 1969. Prior to November 18, 1967, the official exchange rate between pound sterling and the Indian rupee was 1:21. On November 18, 1967, U.K. devalued its pound sterling and, therefore, the official exchange rate on and from November 19, 1967, between pound sterling an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the provisions of rule II 5(b) which are reproduced hereinabove. On a reading of the above rule, in our opinion, there can be no doubt that the varying exchange rates have to be applied to the different items of income or profit or gains having regard to the date on which such income accrued or arose to an assessee in the UK." Hence, this reference. In sustaining the orders of the ITO and the AAC, the Tribunal for the first time relied on rule 115(b) of the I.T. Rules and went so far as to hold that the same concluded the controversy. The assessee has challenged the vires of that rule on a number of grounds. But, at the hearing, the ground that the rule was ultra vires the parent Act was alone pressed. Sri K. P. Kumar, learned advocate appeared for the assessee. Sri K. Srinivasan, learned senior standing counsel for the Income-tax Department, assisted by Sri H. Raghavendra Rao, learned junior standing counsel appeared for the Revenue. Sri Kumar has urged that the official exchange rate between the pound sterling and the rupee prevailing as on March 31, 1968, that being the last day for computation of total income for that accounting year or the following assessment year s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in sections 53, 54, 54B, 54D, 54E and 54F, be chargeable to income-tax under head 'Capital gains', and shall be deemed to be the income of the previous year in which the transfer took place. (2) Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into or its treatment by him as, stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset." " 48. The income chargeable under the head 'Capital gains' shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely: (i) expenditure incurred wholly and exclusively in connection with such transfer ; (ii) the cost of acquisition of the capital asset and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking up accounts there is no overall income, the charge does not crystallize, because there is no income on which the charge of tax may settle." The Tribunal while rightly noticing this ruling relied on by the Revenue, in support of its case has glossed over the same by observing that it was doubtful of its application to the facts of the case before it. We need hardly say that no case is an authority on facts and that what really binds is the ratio decidendi or the principle decided by a superior court and more so by the Supreme Court which is binding on all courts and Tribunals in the country. We are of the view that the enunciation made by the Supreme Court in BTC's case [1967] 66 ITR 373, on the scope and ambit of a receipt of income, equally applies to a receipt of income chargeable to capital gains and is not distinguishable and bears on the question. If that principle bears on the question, then it follows that its conversion thereto from one currency into another currency which is the only other question must necessarily be as ruled by the Supreme Court in that case only. Even the ratio of the earlier two cases of the Supreme Court in CIT v. Ashokbhai Chimanbhai [1965] 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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